Smartphone Use = Higher Insurance Rates?

Fatal accidents are on the rise, and so are consumers’ auto insurance premiums. Allstate President Matthew Winter told shareholders that “the correlation between smartphone ownership and accident frequency is striking,” according to a Wall Street Journal article.

When accident rates increase, insurers’ costs increase, and they pass these costs on to consumers in the form of higher premiums. In the five-year period between 2011 and 2016, average U.S. auto insurance premiums rose 16 percent. By 2016, average annual auto insurance premiums had reached $926, according to Insurance Information Institute statistics. This occurred despite advances in anti-collision technologies that were supposed to help drivers avert accidents.

Traffic fatality numbers for 2016 were not available when this issue was published, but the number of fatal auto accidents jumped 7.2 percent in 2015. The increase in claims could stem partly from economic conditions. More people are working and gas prices are lower, so there are more people on the road. More traffic also means drivers have less time to take corrective action and avoid an accident if they are distracted.

The federal National Highway Traffic Safety Administration (NHTSA) attributed 9.9 percent of all 2015 traffic fatalities to distraction of all types — such as reaching for a dropped item, attending to children in a back seat or eating — up from 9.8 percent in 2014. Although the NHTSA doesn’t separate smartphone-related distractions in its studies, insurers suspect smartphone use contributes to many traffic fatalities. According to the Wall Street Journal, insurer Cincinnati Financial Corp. told investors last October that it is seeing many accidents with “no skid marks.” (Smartphone Addicts Behind the Wheel Drive Car Insurance Rates Higher, February 20, 2017)

In a 2015 Erie Insurance survey, one-third of respondents admitted to texting while driving. Among younger drivers, rates could be even higher. Currently, 46 states ban text messaging for all drivers, along with D.C., Puerto Rico, Guam and the U.S. Virgin Islands.